Post Menu and Details.
- What is Bitcoin Mining?
- Is mining bitcoin still profitable as of 2021?
- Price of electricity
- Price of hardware
- Efficiency of hardware
- Mining difficulty is current and in the future
- Current price and the future price of bitcoin
- Time left in next bitcoin halving
- Ability to minimize expenses
Reading time: ~4 minutes
People started getting attracted to the world of cryptocurrencies when bitcoin’s value rises in 2015 from $300 to $20,000. The financial market was astonished to see the rise in bitcoin’s value, and then people got shocked, and some even came to the road when the price of bitcoin dropped to $8000 in 2019.
Not only bitcoin but also other cryptocurrencies have a volatile market, and this is the main reason why people hesitate to invest in cryptocurrencies. The two main alternatives of bitcoin as of 2021 include Litecoin and Ethereum. Instead of buying crypto tokens on an exchange, users consider mining their bitcoins. If you want to learn trading cryptocurrencies, then you can use the weedprofitsystemapp.com to trade.
Do you know the history of bitcoin mining? If no, then let’s discuss bitcoin mining and its profits in this article. In 2009 on 3rd January, for the first time, the first block of bitcoin was generated. The creator of bitcoin, Satoshi Nakamoto, created a digital currency and became the only cryptocurrency miner by mining bitcoin.
During that time, there was competition because bitcoin was the only cryptocurrency that existed, and this has made miners gather a large number of bitcoins. Some miners even waited for an increase in bitcoin’s price and have made a handsome amount of money.
As of 2020, many investors are attracted to bitcoin mining, which has also increased the complexity of mining. While many investors attracted some people who are engaged in cryptocurrencies often think whether mining bitcoin is really profitable.
What is Bitcoin Mining?
Bitcoin mining is to verify the bitcoin transactions and add them into blocks to add them further into a chain of blocks known as the blockchain. In the process of bitcoin mining, the bitcoin network is running. The miners are the ones who solve the complicated mathematical problems to mine a block.
To solve complex problems, the miners use the best mining equipment. Many miners gather to solve the complex problems, and the miners who first solve the problems get the reward of newly created bitcoins. The block reward is given to encourage the miners to do their work and putting efforts.
The maximum mining capacity is handed over to large companies. This is done to place big mining farms in places where the cost of electricity is less and to make it available to ordinary people. After understanding the process of bitcoin mining, we will know whether bitcoin mining is still profitable?
Is mining bitcoin still profitable as of 2021?
The answer to the above question is that the profitability of mining bitcoin depends on several factors. As discussed above, the complexity of mining bitcoins increases, which also means that the hash power is increasing. This also indicates that miners are carrying out their work, and there are lots of investments made in mining. Now the question is whether mining is profitable to you. To calculate the profitability of bitcoin mining, we will discuss some factors, which are as follows:
Price of electricity
Electricity is one of the biggest expenses for bitcoin miners. If miners plan to mine bitcoins in a region where electricity price is high, mining will never be profitable. It is always suggested to mine bitcoins in regions where the price of electricity is low, as then only it will be profitable and beneficial.
Price of hardware
The mining hardware plays a crucial role in mining and its profitability. If you spend your money buying the best mining hardware, you will get more returns on your investment. It is advised not to sacrifice your mining hardware. If you spend less money on less efficient hardware, you can never win the bitcoin reward and return on your investment.
Efficiency of hardware
It is important to get efficient mining hardware. The different mining hardware has distinct mining power to consumption ratio of electricity. If you spend good money on getting efficient mining hardware, it will consume less electricity and reduce your expenses.
Mining difficulty is current and in the future
The main issue in today’s time for miners is difficulty in mining bitcoins. Before you enter into the mining cryptocurrencies, you must pay attention to mining’s difficult change. Sometimes, there are decreases in the difficulty level of mining, but still, it always increases. Therefore you must know about the mining difficulty that is currently and that will be in the future.
Current price and the future price of bitcoin
The reason why people hesitate to invest in bitcoin is because of its highly volatile market. The price of bitcoin depends on its demand and supply, and it keeps on fluctuating daily. Obviously, the crypto analysts believe that price of bitcoin will increase shortly. But before you start mining, you need to consider the current and future price of bitcoin. It is better to keep yourself updated with current news and graph of the bitcoin market to understand it better.
Time left in next bitcoin halving
Since 2009 it was a protocol set by the founder of bitcoin that bitcoin mining’s reward will be halved every four years. The block reward at that time was 50 bitcoins, and as of 2021, it has become 6.25 bitcoins. The last bitcoin will be mined till 2140, and therefore you must consider the profitability of bitcoin mining by considering the time left in a halving of bitcoin.
Ability to minimize expenses
The main reason that miners leave bitcoin mining is because of high expenses. Some miners use different tricks and strategies to reduce the expenses of mining. If you plan to mine bitcoins, you must think about setting up a mining farm in a cold climate as it will remain cool and consume less electricity.
It is imperative to consider all the factors to estimate the profitability of the bitcoin mining process.
Thank you for reading!